Cost-Benefit Analysis of policies for the development of electric vehicles in Germany: Methods and results

Policies toward the diffusion of electric vehicles received a lot of attention in the latest years in many developed countries. Yet the real costs and benefits for society as a whole of this technology have received limited attention from economists. In this context, the present paper proposes a thorough cost benefit analysis of policies for the development of electric vehicles in Germany. It also reviews the main existing models of EV diffusion to shed light on the modeling issues underlying the evaluation of EV policies. Elaborating on a comprehensive simulation model, it shows that the potential for EV is fairly limited while there is more room for intermediate technologies like Plug-in Hybrid Vehicles and Range Extenders. The paper concludes that most of the investigated policies have a negative benefit-cost balance. These results are strongly driven by the regulatory framework in which EV diffusion could take place and especially the Car Average Fleet Emission regulation EU 443.